Baghdad, Iraq (CNN) -- Iraq said Friday that it will file a lawsuit against five Blackwater security guards cleared of manslaughter charges in the 2007 killing of 17 Iraqi civilians, an act a government official called murder.

The Iraqi government also will ask the U.S. Justice Department to appeal a federal judge's "unfair and unacceptable" dismissal of the charges Thursday, spokesman Ali al-Dabbagh said.

An Iraqi man wounded in the 2007 incident also voiced his anger Friday, saying U.S. District Judge Ricardo Urbina's dismissal of the charges showed "disregard for Iraqi blood."

Urbina found Thursday that prosecutors wrongly used the guards' own statements against them.

"We were expecting that American justice system is fair and independent," said Hassan Jaber Salman, a lawyer. "It's clear that the justice system in America is unjust and unfair."

Al-Dabbagh said "investigations carried out by specialized Iraqi authorities unequivocally found that the Blackwater guards committed murder and broke use-of-force rules when there was no threat requiring the use of force."

The September 16, 2007, bloodbath in Baghdad's Nusour Square, which also left two dozen wounded, led Iraq's government to place limits on security contractors hired by Blackwater and other contractors. Blackwater has since changed its name to Xe.

The Blackwater employees were guarding a State Department convoy in western Baghdad when the shooting began. The company said its contractors came under attack, but Iraqi authorities called the gunfire unprovoked and indiscriminate.

Urbina found that the government's case was built largely on "statements compelled under a threat of job loss" during a State Department investigation of the shootings, violating the Fifth Amendment rights of the five men charged.

"In their zeal to bring charges against the defendant in this case, the prosecutors and investigators aggressively sought out statements the defendants had been compelled to make to government investigators in the immediate aftermath of the shooting and in the subsequent investigation," Urbina wrote in a 90-page decision.

In the ruling, which followed three weeks of hearings, Urbina said the explanations prosecutors and federal agents offered for using the guards' statements were "all too often contradictory, unbelievable and lacking in credibility."

"In short, the government has utterly failed to prove that it made no impermissible use of the defendants' statements or that such use was harmless beyond a reasonable doubt," he wrote.

There was no immediate response to the decision from the Justice Department, which can appeal the ruling or seek new indictments against the men.

The men were guarding a State Department convoy moving through western Baghdad when the shooting began. The company said its contractors came under attack, but Iraqi authorities called the gunfire unprovoked and indiscriminate.

Each of the now-former guards -- Paul Slough, Evan Liberty, Dustin Heard, Donald Ball and Nicholas Slatten -- faced 14 counts of manslaughter, 20 counts of attempted manslaughter and one count of using a firearm in the commission of a violent crime. Prosecutors requested that charges against Slatten be dropped in November, but Thursday's ruling dismissed the counts against all five.

"We're obviously pleased at the decision dismissing the entire indictment and are very happy that these courageous young men can begin the new year without this unfair cloud hanging over them," said Slough's lawyer, Mark Hulkower.

A sixth guard involved in the shootings, Jeremy Ridgeway, pleaded guilty in 2008 to voluntary manslaughter and attempted manslaughter.

CNN's Jomana Karadsheh and Mohammed Tawfeeq contributed to this report.